While I understand the socialists did Hungary no favors, and the economics and judiciary questions are colored by that connection, the most disturbing part of Orban/Fidez/Jobbik has been the creeping return of Anti-Semitism to a European country, with little or no attempt to quell it, forget the fact that most of Hungary's once vibrant Jewish community (among whom was some of their greatest artists: Brassai, Capa, Maholy-nagy) either perished or emigrated, there are still morons who want to blame the survivors, its pathetic, utterly pathetic and a shame for all of Europe but worse is that it seems to be sanctioned, tolerated, and unchallenged meaningfully not just by Fidesz but also the Parlimentary group in the EU it belongs to. do a google search for an image of Jobbik and tell me those slobs have any place in a democracy

So why don't they just leave the EU and ask the "multis" to move to Slovakia and other neighboring countries? They are not under Russian occupation anymore (though Jobbik, the Hungarian nazi party wants to align with them once again). If they don't like the EU they can get out just as they got in.

The reason they are not doing it is because they live on EU handouts. Orban's salary is practically paid by Germany as Hungary doesn't produce anything by itself.

Looking the food prices, Hungarians should be grateful to Tesco and other foreign investors as they introduced new store formats and low prices to the market. Their presence caused healthy competition as a result of which Hungarians can shop in pleasant Hungary’s CBA shops and pay reasonable prices.

Without Tesco and Lidl, Hungarians would have been in the situation as shoppers in Serbia, where the retail market was till recently dominated by the government linked Delta Holding and basic grocery products were more expensive than in Germany.

1. Azerbaijan is not a stable democratic country and it is not part of the EU. If you have a neigbhour with whom you have an agreement, and they broke it, what do you do? If you have neighbour with whom you don'thave any agreement, can you do any sanctions which change their behaviour? Hungary is your first neighbour, Azerbaijan is the second. Mr Orbán's laws and actions help make Hungary a less stable democracy. And even a dangerous one.
2. Ms Hossó's real problem is her paranoid Hungarian attitude. We've been doing this in the last 150 years. The world is against us. At least we believe it.
3. For me, the EU is the saviour. It helps me to remain free. Or gives me the hope that I can easily leave my country when Mr Orbán or the Jobbik decide that I'm also a bad leftist, jewish, gipsy or whatever kind of man who doesn't deserve Hungary. However I'm Hungarian, calvinist and economically on the right side...

You are clearly a supporter of the old regimes, Socialist and before, communist. The Fidesz or Orban, doesn't threaten jews, gypsies or leftists. That's the myth the left has sold to their friends in Brussels and left leaning media in Western Europe. Your type of people should be ashamed of themselves, crying like infants because the left lost the elections--deservedly--two years ago. The socialist stole, cheated and lied for 8 years and Brussels had done nothing about and said nothing about it. All of a sudden all hell breaks loose against Hungary. Can't stand the hypocrisy of Brussels, the IMF now and the way The Economist presents a one sided view of these matters. This is a very disturbing picture of the European Union, lording over small states and acting like classic Commissars of a hundred years ago . My way or the highway. That's hardly democratic.

Rather, the IMF, European Commission, western governments, domestic media, the western media, the Hungarian opposition, Hungarian judges, the central bank and even the law is corrupt and biased against Fidesz! It's all corrupt and communist! Yeah right... Try some critical introspection. Sure, the previous government created many of Hungary's problems - but they aren't the ones burning bridges, having tantrums and attacking democratic institutions/ separations of government branches.

The European Commission doesn't lord over any states - big or small. It just enforces the treaties to which every member has signed, and enforces strict austerity measures and well audited accounts (politically essential for the donor countries) whenever it is requested to provide bailouts.

So everyone who doesn't support FIDESZ must be a communist? This is the typical facist attitude. Have you heard about objective criticism that doesn't have the purpose of supporting any political party? FIDESZ started the same as the communists in 1948: confiscation of private property. They are the same as the socialists just with facist slogans.

@marting456
"FIDESZ started the same as the communists in 1948: confiscation of private property."
You mean probably the "private" pension fund. However, the "owners" did not pay anything for it: it was completely funded through public debt. How should I come to pay back the debt that someone cashes as his/hers "private" pension?
If you or anyone else wants to have a private pension account, then walk into the office of an insurance company and make a contract.
You'll pay and you'll cash at the end; and of course such contracts were not touched by FIDESZ or anyone else... just try, it is as simple as that.

How was it funded through the public debt? People worked and part of their salary went into a private fund. The funds may have purchased government bonds but then the public debt is funded by the private pensions and not the other way. These government bonds are traded in the open market so when a private pension fund sells them someone else buys them.

@marting456
"People worked and part of their salary went into a private fund."
More exactly, part of their original pension contribution went into the pension fund.
Now, the original pension contribution did NOT cover the running pension payments; and then yet another part was channeled into the "private" pension fund.
Got it? The running pension payments remained the same and nobody paid more pension contribution; there was no extra payment and mysteriously a "private" pension fund came into being.
Where did the sum come from, that was departed into the "private" pension fund?
Public debt, of course.
And some people really think that that money belonged to them and everybody should pay for the generated debt.
If you want to have a private pension account, then walk into the office of an insurance company and make a contract; I tried and it works. And it is more fun.

You still don't get it. The government pension system is a Ponzi scheme. Just because people in the past participated not every current worker needs to participate now. In a capitalist system an individual has no obligation to pay someone else's pension. Everyone needs to save for their own future or make sure their children take care of them. The money for the private pensions came from what people earned as wages. What people earn doesn't automatically belong to the government. The government decided to fund the pension deficit by borrowing instead of cutting benefits. This has nothing to do with people saving in a private fund instead of relying on the government. Quite the opposite, one more reason not to believe the government.

@marting456
You write: "In a capitalist system an individual has no obligation to pay someone else's pension. "
While this is patently not true, you seem to forget the running pension payments. It must be serviced as well.
On the other hand I like very much your fondness towards private pension schemes: make a contract, pay 15 years long and then see how much you get at the end of the term. I tried it, and it makes fun.
In the meantime you'll have enough spare time to think about "private" pension schemes of other people that are funded by public debt that you'll be obliged to pay back.
Then read again these somewhat superficial statements that you wrote into this blog.

I already explained to you that all public pensions are a ponzi scheme. People paid into these schemes and the government spent the money relying on future generations of suckers to pay the actual pensions. It is funded by public debt because the money is not there and no politician wants to admit that (FIDESZ, MSZP, Jobbik - all the same). This has nothing to do with private pensions. Now when you pay into the public pension it is essentially a tax to pay past participants. There is no guarantee that future generations will pay your pension.

@marting456
ok, I understand your point; I am also confident that you've made a contract for your private pension that you pay yourself and do not rely on a kind of "private" pension scheme that was created by primitive racketeers which was later rightly confiscated by this government.

The Fidesz government is taking ever more control, and both foreign and domestic bond holders fear that they'll raid the central bank - depreciating the Forint and effectively defaulting on a large portion of the debt. That is why yields are at 9%. Long term, even if the tool is not excessively exercised now, investors and bankers will fear that the political control over the central bank which Fidesz has established, will eventually be passed into the hands of an imprudent government. And so, Hungary will have to pay a debt premium for decades, or as long as it retains its own currency. In that context, even joining the Eurozone would be a major improvement.

Perhaps eurozone membership would be structurally beneficial even without Hungary's credit mess. 2011 exports were 77.6% of GDP, of which 46.1% went to Germany/ Austria/ Slovakia/ Italy/ France. Let's place a conservative estimate and say that only 50% of exports went to eurozone countries. That's 33.8% of GDP! And imports from the eurozone are at least 28% of GDP! Given such an economic dependence on eurozone trade, Hungary might achieve higher long term investment and higher sustainable growth by joining the eurozone and removing exchange rate risk.

Romania is still working hard to join the eurozone by its target entry date of 2015 (it's achieved all criteria other than 2 years on ERM II, which it must join by 2013 if it doesn't want delay. Things might slip, but they probably won't). The euro is already widely circulated in Bosnia, and the central bank of Croatia (joining the EU next year) has a fixed euro exchange rate and a majority of board members in favour of joining.

If all those economies join and grow, then not only will Hungary be geographically surrounded by the eurozone (bar Ukraine and Serbia) - its eurozone exports will be above 40% of GDP.

Not only because of lacking central bank credibility and high credit cost - also for the trade and growth opportunities, Hungary should pursue eurozone membership.

This seems a bit pie in the sky. Hungary doesn't meet the criteria, the government doesn't want to join, and the Eurozone doesn't want Hungary. The forint is now in the new constitution, meaning a two-thirds majority in parliament will be needed to introduce the euro. Though it causes havoc with the economy, the forint devaluing is one of the few ways to make Hungary more competitive.

Eurozone entry is rule based - if Hungary meets entry criteria, it will be accepted. Those criteria for entry of a new country aren't onerous:

- EU membership
- two years of ERM II membership
- under 3% inflation
- deficit under 3% of GDP
- long term debt yields below 6%
- gross government debt that is under 60%, or which has declined for two successive years with credible plan for reduction past that threshold.

Once the credit crisis passes, Hungary can quite easily attain all of the above (even a euro peg might be useful for credibility). Indeed, Hungary would probably attain almost all of the above without aspiring to eurozone membership.

The domestic issues you list however are far more salient. The Hungarian people don't want to join right now (that may change with a period of inflation and/or volatility, and as further neighbours join). A two thirds majority willing to do something in parliament that may have political cost - happens quite often actually, but you can't expect it.

On balance, I agree with what you say. I don't expect Hungary to join by 2020, but suspect that it will eventually. It's just that Hungary is in a natural position to benefit, and Hungarian economists, bankers, businesses and senior civil servants are increasingly going to see this and lobby for it.

On whether devaluation is desirable? It certainly isn't necessary for competitiveness or trade - Hungary will be booming economically (catch up growth) as soon as credit conditions ease internationally. If it is politically desirable to wipe out savings and clear some of the national debt, I admire the boldness of the politicians concerned.

(True enough: depreciation happened in the UK - a more insular country with less reliance on trade, with greater central bank separation and credibility, and with a deep deflationary depression to take the sting out of inflationary effects.)

You can easily peg your currency to the Euro. Argentina pegged to the USD. Hungary doesn't want to do it because it means less power for the politicians, especially once they are done with getting full control of the Hungarian Central Bank.

The actual currency is meaningless in the case of Hungary. Hungary needs capital, not money and this must come from the West. Besides soon there will be no Euro to join anyway. It will just save Hungary the transition mess.

The whole topic is not set correctly. EU/EC is not picked on "Hungary" as such but is critical to concrete measure taken by current Hungarian government/ruling political party that takes full advantage of its constitutional majority to push very questionable moves - that go against standard division of powers in democratic societies (e.g. reducing independence of the central bank) or against Hungarian civic society that currently represents the main guard of Hungarian democracy. From our communist experience we know how single-party-rule can be harmful and thus it should be understood that EU is helping in keeping Hungarian plurality alive rather than destroying it.

Also, Hungary operates in EU single market which fact attracted a lot of investors and has many international treaties for protection of investments, and thus it should be not only EU but also involved corporations that should appropriately react on non-standard moves of Hungarian government. For example, I still don't understand why international banks haven't initiated arbitrage for spoiling investments when Hungarian government forced them to accept mortgage repayments in foreign currencies in a rate that is substantially below market rate. Poor Austria, she lost her triple-A national rating because of exposure of Austrian banks in Hungary and this ultimately destabilizes situation in the whole region.

That's why even though Hungary is indeed an independent country, the economy and politics is so interconnected in EU that national governments simply cannot do whatever they like because they destabilize others too. This is what Ms Hossó should realize first before writing her articles.

@Thomas Marny
You write: "For example, I still don't understand why international banks haven't initiated arbitrage for spoiling investments when ... to accept mortgage repayments in foreign currencies in a rate that is substantially below market rate."
Possible causes:
- many of those contracts with mortgage payments were unsustainable: many people would not have paid anyway. A great part of those loans were results of "reckless lending"
- those banks will keep their market share in Hungary; it is a very valuable asset in the long run.

AMZ49, arbitrages are favourite ways for rich MNCs to make huge easy extra money on tax payers. For example, Nomura received dozens of billions from Czech tax payers only for the fact that the state has subsidized a state-owned bank, but not the one that was owned by Nomura in the country in late 1990th.

Thus, if Austria and Hungary have signed an investment protection treaty then any uncommon interventions of the state is almost automatically reason for starting the arbitrage without affecting any of its operations.

BTW, even smaller local companies have learned this trick. They take advantage of favourable investment protection treaty with the Netherlands and common EU market to set up companies in Netherlands even though they intend to operate only locally so that they could easily sue state in arbitrages.

@Thomas Marny
Thank you for your answer.
I do not think there was "huge easy extra money on tax payers" to be made in Hungary, through arbitrage or whatever.
Those banks had no choice because many of those loans were simply bad; too many people would not have paid anyway.

Ferenc Avari,
.
are you implying that those countries in your imaginary research with incremental decrease of exports which do better than others do that because they toe the line drawn by the EU unelected honchos?
.
or because their leaders don't criticize the same honchos?
.
or that Hungary would just thrive in the same circumstances - i.e. dramatic drop in exports - if ex-Communists were in the office?

I don’t remember that Mr Orban has ever accused foreign companies for the troubles of Hungary. Quite the contrary is true: some weeks earlier he took apart on the start of the new Mercedes factory in Kecskemet. There he praised German investors in the highest possible terms.
What’s more, this government seems to be in pain to attract more similar investors: company tax for larger (!) companies was decreased. The fiercely attacked flat rate income tax is a plus for companies with high added value. The government reforms both vocational and higher education to fulfill the demands of foreign investors.
Hungarians don’t have to compare themselves to Azerbaijan to feel singled out by the EU Commission. It is enough to remember our own past: in 2005 the socialist government tried to put the National Bank under it’s influence in the very same way, as this government does. The EU commission explicitly refused to interfere at that time although the National Bank asked for it. I also recommend you an interview on Origo, where the Eastern-European head of the RTL refused to condemn the new Hungarian Media Law, suggesting that it is basically similar to that of Germany. Maybe the EU Commission knows it better:)
I also have problems if you regard the former institutions independent. I don't think they were more independent than they are now; the head were just elected by other parties. The president by the way is a very bad example: The two not political presidents: Mr Madl and Mr Solyom were elected by the Fidesz. Arpad Göncz the only president elected by the left, was a party politician too, just as the most of the German presidents in the last 60 years.

It is good to get all the Fidesz talking points in one paragraph, because sometimes someone forgets one or two.

Mr Orbán has a long history of decrying foreign capital in Hungary, and if you can't remember it, then I suggest you look at basically any major speech he has given recently, for example on 15 March. Yes, he attended the opening of a Mercedes factory. It doesn't erase, nor even mitigate, his anti-foreigner investor rhetoric and actions over the past decade.

When was company tax for larger companies decreased? What are you referring to? I am quite knowledgeable in this area and I honestly do not even know which measure you may be trying to misrepresent.

To say the government reforms to higher education and vocational training are somehow beneficial to foreign companies is... well, priceless. The "reforms", some of the most half-baked and knee-jerk thought bubbles in the history of this half-baked and knee-jerk government, will not help. In fact the government still doesn't even know what it will do. There are are entire university faculties not knowing if they will exist by September. There is an entire university (Corvinus) which doesn't know if it will exist by September.

Andreas Rudas, of RTL did say that the media law wasn't that bad. 1) that's how the media law works: say nice things about the government and there won't be any problems. 2) in the very same interview he talks very happily about his extensive business dealings and company's partnership with Zsolt Nyerges and Lajos Simicska, the former treasurer of Fidesz, and both the current bagmen, and biggest beneficiaries of the Fidesz government. Yes, the EU Commission knows better.

our different view of point make it possible to interpret Mr Orban’s speech differently. Nevertheless, you also could see that Fidesz and Mr Orban has actually a long record of pro investors actions too: think on special tax offer for AUDI in 2000, or more than friendly relation to TEVA or now to Mercedes Benz. And yes they decreased corporate tax for companies in medium size in 2010, and promised to do so also for the large ones. This latter measure was postponed, though. I share your critics on the reforms on education. But you shouldn’t deny that more practice-oriented education for workers is a wish of western investors. They need more engineers as well; the new education system should provide it.
What you refer to are critics and measures on inventors in the service sector. As I remember Orban criticized foreign banks very cautiously (e.g. Mr Hollande or Mr Sarkozy uses more definite terms:) Let be honest on this question: there is hardly any western country, which sold that much part of it’s service sector to foreign investors as Hungary did. Green but sometimes even socialist politicians admit this fact. Orban tries to achieve a new balance in this question, but I don't think you can interpret this a general anti-western, anti-market attitude. Actually, if Hungary would like to be more similar to Holland or Germany, he does the right thing.
Do you really believe that critical media endangered in Hungary? That would mean that 80% of the media coverage in Internet is actually self-destructive. Or you think origo, index, hvg, nol etc. are not critical enough? What is more, the etching tenor of these critics is pretty unknown in the German press for example.
The 5 members of the board of the Venice commission looking at Hung laws are former members of socialist and liberal parties. According to your logic, we can just disregard the opinion of these guys, with that of the EU Commission:) I think RTL is pleased with the new media law, because they took apart in the creation of it.

I am sorry that you think that Fidesz has a balanced viewpoint on foreign investors, or that the plusses and minuses are about the same. Foreign investors don't agree with you.

At the very least you can agree that Orbán's message is mixed on foreign investors. There are good foreign investors and there are bad foreign investors. Do you remember all the talk about the pension funds, before our Dear Anti-Socialist leader nationalised them? (Banks run the pension funds). Who gave cigarettes to young people? Only multinationals (and have you ever seen a local ABC cornershop ever ask someone for ID to buy cigarettes?) These are specific examples, but really there are countless.

Orbán's actions speak louder than his words and his special sector taxes have almost exclusively hit forign investors, just as his plaza ban was also aimed at limiting foreign companies. The bank tax hit foreign banks, the government completely lied to pharmaceutical companies about what tax measures they would introduce. New crisis taxes on retail stores, telecommunication and energy distribution activities. Buying out Suez (for 50,000,000 euros just for the Bp waterworks), changing the stupid coupon system from the sodexho one to the Erzsébet one - which cannot be used in international shops, just CBA - the owners of which are big Fidesz supporters).

And because the government doesn't know what it is doing, no-one knows what is next. Someone has a thought bubble, some of which are ridiculous, and then two days later it is implemented. They just decided to build a new government phone network. Oh, now there will be a tax when I withdraw money from my account, oh VAT just went up, oh, maybe they will give extra votes to families with children (thank goodness it didn't happen), oh maybe they will take everyone's private pension, oh we will close Közgáz university because we promised the building to a property developer, oh we might change the school system, oh we will tell the banks what the exchange rates will be, oh we will outlaw the main opposition party, oh we will change the electoral law completely, oh we will make it a crme to be homeless, oh we will introduce a completely new constitution drafted on some guy's ipad and not consult anyone about it, oh we will put things like flat taxes and strictly heterosexual marriage and media regulations in the constitution so people can't change them later, oh we will introduce work camps for unemployed, oh we will just rename lots of places round Budapest, oh we will award all public construction contracts to our own company, Közgép. You get the idea and know what I'm talking about.

And yet the basic things which Hungary needs (simpler tax system, less pointless paperwork and bureaucracy, less corruption) they don't even consider doing.

Which part of the service sector are you thinking of? There is nothing to stop Hungarians from starting their own service sectors - oh, wait, there are: they can't get finance from banks because Orbán introduced two separate taxes or costs on banks in the middle of basically the biggest credit crisis in history. And there are still ridiculously complicated taxes and paperwork to starting and running a business and hiring people (legally).

I have a problem with the media law because they seemed to pick the most extreme and harsh aspects of any system they could find, and the term of office (9 years) for the media board, and two-thirds majority needed to appoint is ridiculous. In other countries where they have silly media laws, maybe there is a more civilised political culture, where these laws are used for what they were intended (to stop the publication of obscene or offensive material) rather than for party political advantage. But does anyone, including Fidesz supporters, believe that Orbán would not use them for advantage? Fidesz' only political philosophy is "revenge". I don't think that the critical media is going to disappear overnight - it is impossible, especially on the internet. But I do think before 2014 some outrageous things will be done by Fidesz in the lead up to the election. That is more than the criminalisation of the major opposition party for "past crimes" and passing a new law specifically to stop a new party from forming in the parliament.

I'm from Holland, please don't insult me with phrases like "Actually, if Hungary would like to be more similar to Holland or Germany, he does the right thing.". Holland would never come up with an totally counter-productive early redemption program and after that, a "Lex OTP" (no tax for banks with subsidiaries abroad, which only applies to the patriotic OTP ) and then create a state monopoly (szép kártya) where only non-foreign banks may issue the product.

"they can't get finance from banks because Orbán introduced two separate taxes or costs on banks in the middle of basically the biggest credit crisis in history. And there are still ridiculously complicated taxes and paperwork to starting and running a business and hiring people (legally)." Yes, completely true, I've seen it from closeby. Running a "white" business is practically impossible in Hugnary due to bureaucracy. And working in a bank, I know very well, that we even have to decline credits to better clients, because all liquidity was sqeezed out by the bank tax and early redemption. What's even worse: due to the early redemption, banks have lost their premium customers (those without payment problems, the bulk of early redemption was paid from savings, not other loans), the remaining portfolio generates losses. So there is no way for banks to finance even promising companies due to Orban's 'unorthodox' moves. And this is not a short term problem -- it will harm the economy for years to come!

Well, I believe you that Holland would never do things like that. I think, Holland would never do other things what Hungary did, either. Very likely that Holland would not cut corporation tax for foreign retailers for ten years, would never sell state owned banks for foreigners for almost nothing. I don’t think Holland would sell natural monopoles like electricity or water suppliers. I don’t think it would be allowed to mortgage houses in mass based on a foreign currency, which is beyond the control of the Holland government and which is cheaper for foreign banks than for domestics.
and I never meant so. I meant in general terms that Hungary should find a better balance between providing opportunities for foreign companies and defend its own interests. Just like Holland or Germany do. I am not convinced that everything done by this government is right but the direction is good, to my opinion. Positive discrimination of domestic companies is not allowed in the EU, but done by every government. For underperforming economies maybe it should be even allowed, as positive discrimination is successfully used to meet other socio-economic challenges.
Before you get really offended, maybe you should think about what Holland could have done if US companies would have bought almost everything in Holland after the WWII. If western countries would like to have strong partners instead of mourning, poor backyard countries, they could be a little bit more restrained in Eastern Europe (let be honest, it is really a peanut what western banks lose on the szep kartya, don’t you think?)

It really nice to read all the favourite points of hysterical anti-orban voters:) Maybe, if you could overcome your personal disgust, you could see the other side of the coin, too.
Most certainly, there are good and bad investors. Just like we have good and bad home companies. We like Graphisoft or Richter but we don't like Kozgep, because its economic success seems to be based on cosy political connections (I don’t think that Strabag or Hidepitö were better, though:) In similar fashion, we like Audi as investor, but we (at least me) don’t like Suez, because they get so much for so little. I don’t think they could get in this favourable position without bribing some guys. Furthermore, I don't think we should accept what a banker said that in “normal” situation bank profit margins are at least the doubles in Eastern Europe than in western markets. This kind of difference has nothing to do with a free market. So I am interested in the opinion of useful investors only.
pension funds – Norway’s state run pension fund based on the income of Statoil. That of Britain on Bp’s. The Hungarian private pension scheme was based on public dept. I hope you notice the fine difference in the pattern.
new government phone network –the majority of Deutsche Telecom is state owned, and I bet Telenor and Norwegian pension found also have to do a lot with each other
special sector taxes – well, I don’t remember anyone mourning as tax cuts were given almost exclusively for foreign investors
Közgaz – I don’t know what and why they are going to do there, but you can not explain what economics has to do with horticulture either. Thus, a reorganisation is not necessarily motivated by corruption.
crme to be homeless –this is quite distorted. Living in a small city in Germany I see that in this country living on the street is not allowed either (maybe it is tolerated in Berlin, but you can meet a lot of homeless in Bp too)
change the electoral law completely – well, actually the socialist and the green party would like to change the election system completely, and Fidesz wants to preserve it. This system helps big parties, but also helps small parties to get big: remember, in 1994 Fidesz got merely 7% and they won the election in 1998. And they had much less tools than parties have today.
flat tax in constitution – although, I understand the motivation for this step, you have right here: this is a clear offence against the principles of a democracy. But it is a theoretical problem only, it is so easy to get around it: fidesz does itself this year
media law – the media council have indeed to much right giving frequencies for applicants. I hope the constitutional court let change this part. But in terms of political influence on media, the new law is actually more liberal than the old one, and e.g. the Bavarian media council has more definite tools.
civilized political culture – I think a less hate-filled look at things should belong to it, even on voters site

Sorry I have problems by understanding you. I understand if you write that bank tax squeezed liquidity out. But why early redemption? Actually, early redemption means that banks got a new pile of cash. A considerable part of this money came out of the blue, not from savings or loans. Thus, early redemption should increase liquidity.
You write that banks lost their premium customers, but I don`t think so. They lost their premium debtors, but the same persons could be the premium savers of the next years. I bet that the demand for private pension funds is going to soar next years: so maybe banks should work out attractive constructions instead of self-pitting.
In other countries (even in Romania) if a debtor has temporary financial problems, he can pay only the interest for a while, as the capital in the case of a house mortgage is safe. Why is that not possible in Hungary? I also have problems to understand how can be the interest rate of a CHF house mortgage 7-8%? In Germany a person without regular income gets cheaper credit for commodities, like a car. The EU said to be a free market for goods and capital. How do these things add up?

You are mixing up the public pension funds. In the past there were compulsory contributions from individuals. The individuals owned them. It meant that in the future it would lessen state debt, because people wouldn't require a pension from the government, because they would have all these savings. Now the entire pension is a state debt, and will only continue to grow. So, now, into the future, people will get less pensions, and these will need to be paid for by the government. It will massively increase state debt in the future.

You don't like Suez, so you believe Budapest should pay them a ridiculously above market value price to go away?

There is a difference between retaining a state owned telecom system, and starting a new one in difficult times and in dubious circumstances.

Which tax cuts were given "almost exclusively to foreign investors?"

Under the new election law, if everyone votes exactly the way they did in 2006 (Fidesz 42.5%, MSzP/SzDSz 52.8%), then Fidesz would win the election. Fair?

My point with the list of Fidesz actions is to show that they are unpredictable, and people and investors don't really know what will be next. They just announced 5 new taxes. Who knos what the will do tomorrow?

The reason Hungary is getting so much attention is because the prime minister is attacking the EU in media and questions their legitimacy, and in general calls them a bunch of clowns or incompetent. He simply does not want to wait or follow any rules like other countries, because at home he can introduce a new constitution and 250 new laws in 3 months while in the EU he actually has to follow rules, not just create new ones or edit old ones.

Mr Orban Viktor is happy with the situation because ultimately he just wants a piece of paper that says Stand-By loan agreement from the IMF so the market conditions for Hunagry improves.

The only thing is, if everything is cleared and the IMF standby loan agreement and EU loan are approved, whom will Mr Orban Viktor blame for the failing economy? There are almost 1 million poor, and almost 3 million heading towards minimum wage and month by month survival. God forbid there would be any global changes in the economy because Hungary would fall like a house of cards if the export dropped drastically.

I think it's in Mr Orban Viktors best interest not to get the IMF deal at the moment prior to improving the economy, climate for investors, and unemployment, because frankly there will be no one to blame but his own government and their hubris and incompetence.

@Ferenc Avari
"God forbid there would be any global changes in the economy because Hungary would fall like a house of cards if the export dropped drastically."
What a silly thing: any ecomomy would collapse if its export dropped drastically. You know that of course and you present this as if it were specific to us.

@Ferenc Avari
Thank you for your answer.
- Of course every economy in every country would collapse if the export dropped drastically there; that is actually a minor point here.
- You know that and still do as if that were specific to Hungary.
- You put all your brain power in portaying us even worse as we actually are, despite the fact that there is ample scope for citicism.
That is what I called silly.
Because it is.

Now dear AMZ49, it is time for you to generalizing, stop the personal attacks and back up all your statements with facts.

AMZ49 said, "Of course every economy in every country would collapse if the export dropped drastically there; that is actually a minor point here."

Now in your study you should use at least 20 countries within the European Union. Start by reducing the export in 5% increments all the way to say 50% which could be considered drastically changed. Display all the related and vital macro economical indicators to the countries healths.

Comment on your results and why some countries would do better and some worse if the export would drop drastically and why measures could be taken by each country.

@Ferenc Avari
Thank you for your answer.
Now, I did not intend to attack you personally; I do not agree with you in some points, which is a good thing: that is why we all are here.
Now to the minor point: 50% drop in exports devastates any economy anywhere; 30% drop is more than enough to cause the greatest upheaval, economic, social and political, not just in Hungary but anywhere. We are more exposed than great, more self-sufficient economies but being relatively small and export-oriented is really not our fault; but 30% drop is more than enough to be down and out anywhere.
My main point is that I really feel that you are simply unjust to our country -i.e. yours and mine- in holding something against it that holds to any other economy in any other country.

Hungary has become a kleptocracy under Fidesz. Even their Fascist rhetoric is just a cover for this.
There is nowhere to report to:
the Chief Prosecutor (Fidesz) would not start an investigation, the
Chief of Judiciary (Fidesz) has the right to assign friendly judges to court cases.
It takes a maximum of two days for Fidesz to change any law or even the constitution, sometimes retroactively, to tailor them to the relatives or friendly oligarchs.

That's the typical western approach! Like these countries are wanted to be communist, not that they were betrayed and given to Stalin at Yalta from the shivering fear of the heavy boots of the Red Army...

You're right, Mittel Europa is more to my taste.
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BTW, there was a Germany still not quite "ex-Nazi" in 1967. It was called DDR, or Deutsche Demokratische Republik.
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And there are still many "ex-Communists" in Mittel Europa.

You are right, unfortunately there are still a lot of "ex-communists" in Mittel Europa. But, even then, this is not a correct characterisation for this region. It is not eastern approach but typical western "london" approach. There are communists in the UK too.

The problem is EU and it's companies nicely helped the communists to transfer their power (in return of tax refounds and priviteizing state ownd assets for pennies). Now the post communists are down the drain and the dual messures of EU become quite transparent the previous post communist government in 2006 was shooting and torturing people with the approval and help of the EU there was not a single worry over "democracy".

Besides there is a fact that the communist allies of the EU killed more people in Hungary than WWII. Now a lot's of these communist criminals (Kovacs, Andor, Goncz) having a payed holiday in Belgium but who wants to become a second Belgian Kongo (just because Führerine Merkel orders so...)? LoL Ohh, and if we are worrying together over Hungarian democracy it would be a great help if EU companies would keep the "Same money for the same job" EU directive it would be more useful than worry over the Hungarian government stopped paying the bills of the post communist media, and retire 70+ commie judges... whatta scandal, really!
Also that you repeat it two million times like a parrot west and north european values are remain west and north european values and not becoming general european values just like the satellites of the former state party are not democratic just because they say so.

EU has a huge authenticity deficit in east central Europe due it's non transparent finance, non elected commissars, involvement in corruption hiding and defending criminals, hypocracy, post communist ties and dictating without not just not knowing but fully ignoring the "couleur locale".

"Besides there is a fact that the communist allies of the EU killed more people in Hungary than WWII."
Puhlease! You've completely lost it. You either don't know how many Hungarians died in the Second WW, or you're insane. But since you (rightly) dislike former communists, can I ask what happened to lustration? Why did Fidesz vote down that? Why didn't they open the secret police files in 1998-2002, and why have they not done so now? If they were truly anti-communist, it would have been one of the first laws they passed. Instead they've passed more than 300 laws in two years, but rejected lustration.

"Same money for the same job" only applies within a specific geographic location and workplace. It is about the illegality of discrimination on superfluous grounds (gender, religion, race, nepotism etc, where none of these characteristics are relevant to the job at hand).

For example, German federal employees are still paid different rates depending on whether they are working in former west or former east Germany.

In the UK, private companies set pay rates based on local market conditions (wages for the same work are much higher in London, and much lower in Wales). Public sector pay is set independently in Scotland, and the current Westminster government wants to allow more regional variation of pay levels. National pay bargaining is in fact a very trade-unionist/ socialist policy, and would certainly serve to depress investment, productivity and wages in a country like Hungary (which still has enormous potential for catch-up growth).

You can't change the economic reality: if productivity is low in Hungary, or if there hasn't been enough investment for industry to bid up wages sufficiently high, then wages will be lower than in more developed parts of Europe.

With time and good government, that can and will change. Laws and regulation won't improve things - Hungary needs to attract more foreign investment, achieve a higher domestic savings rate, reduce the public sector share of GDP, survive the global credit crisis and pursue a credible monetary policy.

Given Hungary's current currency and bond yield mess, and given that it will be very difficult to regain central bank credibility, even joining the Eurozone would be a major improvement.

This is good Fidesz stuff. Mention communists every second sentence, 23 years after the change in system. But then refuse to open the archives on who were the communist informers.

What I don't understand is why don't you just steal and destroy the ones relating to top-ranking Fidesz people, and then open up the rest? One explanation is because half the rank and file Fidesz people throughout the country were informers.

I just want to point out that the flag burning picture illustrating the article was taken at an extreme right demonstration. In the context of the article the picture may suggest that supporters of the government are burning the EU flag.

I agree, Hungary is unfairly singled out. Or more precisely, the current government of Hungary is unfairly singled out.

Nevertheless, the Government's behaviour still falls short of what we should expect from a well run country. It's Hungary that suffers from its Government's lack of respect, not the Government's critics.

Of course, you can point to other countries where the damage is even greater.

Euroskepticism in Hungary has increased because it is becoming increasingly hard to believe in the European project.

It is increasingly hard to believe the standards apply equally and fairly to all parties and nations.

It is increasingly hard to believe it is about shared democracy, not control.

It is increasingly hard to believe it is about fair competition, not corporate lobbying.

It is increasingly hard to believe it is about principles, not the whims and interests of a loud liberal clique.

It is increasingly hard to believe it is about sharing responsibility, not offloading it all on a weaker party.

It is increasingly hard to believe it is about growth and prosperity all get to gain from, not the base greed of the financial sector.

It is increasingly hard to believe it is about democratic debate, not a media assault masquerading as "concern" and the stifling of dissent.

It is increasingly hard to believe it is a process all get to participate in.

It is increasingly hard to believe it is for our benefit as well.

The Hungarian electorate used to believe in the European Union, and it used to believe in its own ability to slowly better its lot within this integration. That hope does not exist anymore - although it was much stronger in 2010 than the years before - and without hope, there is no faith and there is no trust. Make no mistake, Europe is something many, maybe even most of us would still like to believe in, never mind the outright lies the liberal media is so fond of telling about us. But we cannot. Not now, not this way. And no amount of political, financial or media blackmail will make us.

@The plummer
Not that it is good or bad if we "beleive in Europe" - it really should not be a question of belief.
On the other hand: couldn't you be somewhat more specific? Actually, it is hard to belive that we Hungarians "belive in Europe" less than e.g. the citizens of Czech Republic, Austria or Denmark.

See page 34: "As in the previous survey, there are 22 Member States where a majority say that European membership is beneficial. Conversely this is the minority view in four countries: the United Kingdom (35% versus 54%),
Hungary (40% versus 49%), Greece (47% versus 50%), and Austria (44% versus 46%)."

During the past years, I have hardly seen ANY new project in Hungary without a table next to out showing the EU subsidies received for it. Without that , there would not have been much development here. Coronat, please make clear that you are willing to forfeit all that in turn for your right to Eurosceptism! And also be prepared as a non-EU member to get export duties on 80% of Hungarian exports! Do you really want that?